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Putin challenges Medvedev budget

Wed, Sep 19, 2012, 01:00

CATHERINE BELTON

VLADIMIR PUTIN has lashed out at Dmitry Medvedev’s government for failing to produce a budget that meets the orders issued on his return to the presidency in May, including lavish spending promises made before the election.

The sharp criticism comes amid signs of a growing rift between the Russian president and his one-time protégé, while analysts say Mr Putin has set his prime minister a task impossible to carry out without making big budget cuts elsewhere.

“I warned from the start that my decrees could not live independently by themselves, that they should be carried out into practical life by the cabinet,” Mr Putin said, addressing a meeting on budget strategy at his Black Sea residence in Sochi.

“There have been systemic failures on a series of positions. If everything remains as laid out in the [budget] plan, then some or other of the points of these decrees cannot be implemented, I already see this, but they must be implemented.”

Mr Putin lambasted ministers for failing to include pension reform in the draft three-year budget, which because of its potential social consequences is a political hot potato that analysts say has stalled action by Moscow for months.

“What kind of budget do you think there would be for next year and the year after without one of the key economic tasks being resolved?” he asked.

The comments, made in the prime minister’s absence, suggest Mr Putin’s patience with Mr Medvedev’s government may be wearing thin amid a widespread perception in Moscow that it has so far failed to deliver any reforms.

However economists said the Medvedev government had been handed an impossible challenge as a result of the extravagant spending promises Mr Putin made in the run-up to elections, while pledging there would be no more tax rises and no increase in the pensionable age.

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The finance ministry has estimated Mr Putin’s spending pledges, including higher salaries for teachers, doctors and other state workers, as costing an additional 2.8 trillion roubles (€65.7 billion), meaning budget cuts would have to be made elsewhere to keep the budget balanced.

The US Agency for International Development will close its office in Russia after Moscow’s decision to end the aid agency’s work in the country, the US state department said last night. The move is believed to reflect Moscow’s hostility towards US-funded groups that seek to promote democracy and the rule of law. – (Copyright The Financial Times Limited 2012)